US private sector output drops sharply in August amid drag from services
Private sector firms in the US reported the fastest pace of declines in output in August outside of that seen right after the first outbreak of the Covid-19 pandemic, the results of two surveys showed.
S&P Global's composite Purchasing Managers' output index, which tallies up production both at factories and in services, fell from a reading of 47.4 in July to 45.0 for August - plumbing a 27-month low, the preliminary or' flash' results of the surveys revealed.
The flash services business activity index meanwhile declined from 47.3 to 44.1, missing economists' forecasts for a rebound to 50.2.
But the headline manufacturing PMI was closer to the mark, retreating from 52.2 to 51.3 (consensus: 52.0).
The survey compiler said that weak demand from clients and a drop in new orders led firms to hire at the slowest pace year-to-date.
And while modest, the drop in new orders was described as the sharpest for two years.
"One area of reprieve for firms came in the form of a further softening in inflationary pressures. Input prices and output charges rose at the slowest rates for a year-and-a-half amid reports that some key component costs had fallen," S&P Global Market Intelligence senior economist Sian Jones added.
"Although pointing to an ongoing movement away from price peaks, increases in costs and charges remained historically robust. At the same time, delivery times lengthened at the slowest pace since October 2020, albeit still sharply, allowing more firms to work through backlogs."